Retaliation on Trade

Republicans pressure Trump to drop tariffs after Trudeau retaliation, but it might not matter, say U.S. trade watchers

By PETER MAZEREEUW      
‘Whether or not you can pressure an administration that has no policy, no direction, and no philosophy, I don’t know,’ says ex-Democratic U.S. trade representative Mickey Kantor.
Prime Minister Justin Trudeau, along with Foreign Affairs Minister Chrystia Freeland, announced plans on May 31 to bring in retaliatory tariffs on certain U.S. exports to Canada, beginning July 1, if President Donald Trump’s administration did not reverse newly-imposed tariffs on Canadian steel and aluminum. The Hill Times photographs by Andrew Meade

Republican lawmakers are pushing back against U.S. President Donald Trump’s tariffs on Canada, Mexico, and the U.S., likely making the case that the move could pave the road to his impeachment, say a former trade adviser to U.S. politicians and a Canadian lobbyist tracking the trade battle.

“The only hope there is the Republican leadership gets inside the head of the administration to say, ‘Whatever you’re trying to achieve, you’re going to lose the House in November. And if you lose the House in November, we’re immediately into questions of impeachment,’” said Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, a lobby group for an industry that relies on steel and aluminum crossing the Canada-U.S. border.

“That’s an argument they’ll certainly make,” said a former trade adviser to Republican and Democratic lawmakers, adding, “I don’t think that it will cause the president to withdraw the tariffs.”

Prime Minister Justin Trudeau (Papineau, Que.) could hardly have hoped for a better outcome after he responded to Mr. Trump’s tariffs on steel and aluminum from Canada, Mexico, and the EU by imposing retaliatory penalties—effective July 1—on U.S. steel and aluminum, and a variety of other goods produced in U.S. swing states or the electoral districts of influential Republican lawmakers. Numerous Republican politicians have openly spoken against Mr. Trump’s decision, U.S. industry groups have done the same, and even the powerful conservative advocacy groups backed by the billionaire Koch brothers, including Americans For Prosperity, are campaigning against Mr. Trump’s tariffs.

It’s not clear to what extent the Republican backlash is related to Canada’s counter-tariffs, however. Several lobbyists and analysts following U.S. trade issues closely said the penalties brought in by Canada’s government have created some pressure on Republicans and the White House, as intended, by hitting the pocketbooks of businesses that export to Canada and are represented by Republican lawmakers. But some of the politicians who have spoken out or taken action against the tariffs—including Republican House speaker Paul Ryan, who was targeted by Canada’s counter-tariffs, and the Republican Senate Foreign Relations Committee chair Bob Corker—have already said they won’t run for re-election, theoretically diminishing the threat unhappy constituents would pose to them.

“Clearly across the country, in many places, what they have done is going to adversely affect campaigns for Republicans in the House and Senate where the Democrats have a chance, certainly to win the House, if not the Senate,” said Mickey Kantor, who served as the U.S. trade representative, the highest-ranking trade official in the government, under former Democratic president Bill Clinton.

“And that’s exactly what puts the Republicans under pressure. Now, whether that can pressure this president, is quite another question,” he said.

“Whether or not you can pressure an administration that has no policy, no direction, and no philosophy, I don’t know,” he said.

Mr. Trump took aim squarely at Canada after the G7 meeting in Charlevoix, Quebec last weekend, and a closing press conference in which Mr. Trudeau said Canada wouldn’t be pushed around by the U.S. on trade. Mr. Trump fired off a series of tweets in which he called Mr. Trudeau “meek and mild” and “dishonest and weak.” He left the G7 summit early, refusing to sign onto declarations about reducing plastic waste and climate change.

Mr. Trump’s chief economic adviser, Larry Kudlow, appeared on CNN Sunday that Mr. Trudeau had “stabbed us in the back.” White House trade adviser Peter Navarro told Fox News “there’ a special place in hell for for any foreign leader that engages in bad faith diplomacy with President Donald J.  Trump,” referencing Mr. Trudeau.

‘Dicey’ for Republicans to take on Trump

The Democrats are thought to have a strong chance of taking back majority control of the House from the Republicans in November’s mid-term elections, needing to win 24 Republican seats while keeping their own, with the party polling well and more Republican-held seats appearing vulnerable than those held by Democrats, according to reporting from The Financial TimesThe New York Times, CNN, Fivethirtyeight.com, and others.

Special counsel Robert Mueller’s investigation into the Trump team’s possible collusion with Russia during the 2016 election campaign, once completed, could produce evidence that Democrats could use to begin impeachment proceedings. If a majority of House members vote to impeach, the U.S. Senate would ultimately decide whether to accept that decision. Two-thirds of Senators would have to vote in favour of impeachment, The New York Times reported. The Republicans have a majority in the Senate, however, and are thought to have a good chance at holding it after the midterms.

“I’m not sure that he is convinced” that impeachment is a realistic outcome, said the former trade adviser, speaking on a not-for-attribution basis. “And at the end of the day, he doesn’t care about anyone but himself.”

Republicans vying for re-election are under pressure to support Mr. Trump’s actions, as the president can undermine their bids to stay in office by backing their challengers for the Republican nomination, which is not automatically awarded to incumbents, said Maryscott Greenwood, the CEO of the Canadian American Business Council, a government relations consultant at Dentons’ in Washington, and a former U.S. diplomat to Canada.

“That’s why it’s dicey to take him on,” she said.

“What [Mr. Trump] is doing is politically popular in the Republican base among Trump voters,” she added.

Mr. Trump’s White House team is digging into the “loyalty” of Republican members of Congress as it decides which races Mr. Trump should lend his support to, or not, CNN reported last week.  The White House is also considering doubling down, and imposing additional trade penalties on Canada in response to Mr. Trudeau’s retaliatory tariffs, The Washington Postreported last week.

Some Republicans may not feel pressured to react to Canada’s threat of counter-tariffs until it becomes a reality, and businesses in their district start to feel financial pain, said Ms. Greenwood.

Bill Huizenga, the Republican representative for Michigan’s second district, told The Hill Times that delay could be a reality for some lawmakers, but “for some of us it’s very ripe and we want to deal with it.”

“Some polling will say that people are in favour of this, and the population are in favour of this, but part of that might be they haven’t seen some of the ramifications of it. I’m not just talking with Canada and NAFTA. I’m talking larger scale,” he said.

“What I have expressed both publicly and privately is that I’m afraid that the actions from the [U.S.] administration, while they may be well meaning, are a misguided effort to recapture a world that really no longer exists that way that it once did.”

Republican Senator brings bill to rein in president

Sen. Corker made a splash last week by introducing a bill that would force the president to seek approval from Congress before introducing tariffs under national security provisions of the Trade Expansion Act of 1962, which Mr. Trump used to bring in the penalties against steel and aluminum from Canada and other countries.

That bill would apply to any decisions made in the past two years as well, essentially giving Congress a veto over Mr. Trump’s tariffs on Canada. Sen. Corker has support from nine other Senators in both parties, The Denver Post reported. The bill has a tough road ahead, however. Time to pass it before the midterms is running short, with a summer break looming. The former trade adviser said the bill was unlikely to attract enough support from Republicans—wary of a backlash from Mr. Trump—and Democrats, some of whom are protectionist, and favour U.S. trade restrictions.

Mr. Trump called Sen. Corker on the day he introduced the legislation, and the two had what the Senator described as a “lengthy” and “heartfelt” conversation, CNN reported. Mr. Trump would have the power to veto the legislation if it advanced through both chambers of Congress.

Mr. Trump’s treasury secretary, Steven Mnuchin, also urged the president to exempt Canada from the steel and aluminum tariffs, ABC News reported last week, after Finance Minister Bill Morneau (Toronto Centre, Ont.) and his counterparts in the G7 issued a statement urging him to do so.

Mr. Trump hasn’t shown signs of backing down yet, tweeting late last week that Mr. Trudeau was “being so indignant” and that Canada’s protected dairy sector was “killing our agriculture.”

“Trudeau has no option but to retaliate,” said Mr. Kantor. “Simply because, for domestic purposes, if not anything else, I would assume that the business community and regular folks in Canada are upset at what the U.S. has done and demand that Canada respond.”

Editor’s note: this story was updated online to include the outcome of the G7 summit that ended June 9.

peter@hilltimes.com

@PJMazereeuw

Who put Canada’s tariff list together, and how

Canada’s list of retaliatory tariffs includes 44 categories of steel and aluminum products—a tit-for-tat response to the U.S. tariffs on Canada—and 84 categories of other products, ranging from playing cards to yogurt.

Those other categories in particular were strategically selected by Canadian officials to put pressure on businesses in the electoral districts of influential U.S. Senators and representatives, particularly Republicans.

Public servants in Global Affairs Canada, including in the U.S. embassy and consulates, worked with peers in the Finance, Agriculture, and Innovation departments to assemble the list, according to Global Affairs spokesperson John Babcock. The offices of the ministers for those departments and the PMO and PCO were also involved, he said.

The government tried to ensure the products being considered for inclusion on the list were finished products, and therefore unlikely to be materials Canadian companies rely upon to make their own goods, and to ensure that non-U.S. alternatives were easily accessible for Canadian consumers, said an official from Global Affairs, speaking on background.

Staff in Global Affairs and the Canadian embassy and consulates would have brought in the knowledge of which states exported which products, said Peter Clark, a trade-focused consultant at Grey, Clark, Shih, and Associates and a former trade official for the Canadian government.

“The steel items are a no-brainer—they simply  copied the U.S. list and invited Canadians to comment to ensure they can avoid injury to Canada,” he said.

Canada has sharpened its approach to assembling these retaliatory tariff lists over the years, said Colin Robertson, a vice president of the Canadian Global Affairs Institute and former Canadian diplomat in the U.S.. Mr. Robertson said he was involved with similar efforts related to softwood lumber disputes in the 1990s and mid-2000s.

“We worked closely with Finance and Industry [Canada] and our own sector specialists. We did not reach out to consulates,” he said in an emailed statement. “We also have more data crunching capacity today to figure out where goods are produced and link it to congressional districts and states.”

Canada’s last government under prime minister Stephen Harper took a more thorough approach to assembling a list of retaliatory tariffs after the Obama administration supported Country of Origin Labelling requirements—commonly abbreviated to COOL—for Canadian meat.

Finance Canada is responsible for tariffs, and took the lead on assembling the COOL list, said Adam Taylor, a trade consultant for Export Action Global who was working as a senior staffer for then-trade minister, now Conservative MP Ed Fast (Abbotsford, B.C.).

“The bureaucracy are best equipped to know that stuff, because our embassy is supposed to track who’s influential with the administration,” and who you can “raise the ire of” if you need leverage, said Mr. Taylor.

The list of counter-tariffs included orange juice, targeting Florida, an important swing state where Republican Governor Rick Scott is challenging Democratic Senator Bill Nelson for his seat; whisky, targeting Kentucky, the home of Republican Senate majority leader Mitch McConnell; yogurt, targeting Republican House speaker Paul Ryan in Wisconsin, the second-largest exporter of the product to Canada among U.S. states, after New York; and more.

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Trudeau and the G7

Canadian internationalism and Trudeau’s leadership in the spotlight at G7

Justin Trudeau’s leadership skills will be tested this week when G7 leaders assemble at the majestic Manoir Richelieu in Charlevoix, Quebec.

Now in its 44th year, it is easy to dismiss G7 summitry as an expensive talk fest. We should look at its  $600 million price-tag as an insurance premium for global wellbeing. And frank talk among leaders of the great liberal democracies is needed now more than ever.

The erosion of public trust in liberal democracies’ institutions – government, business, the media and NGOs –is profoundly disturbing. The public needs to see its leaders taking action on the big issues of the day. The Charlevoix agenda provides that opportunity, covering gender, work, climate, energy, the oceans, protectionism, populism and extremism.

American protectionism will be top of mind in the wake of the steel and aluminium tariffs and the threat of more to come. The G7 finance ministers and bank governors drew the lines last week in Whistler highlighting the “negative impact of unilateral trade actions by the United States.”

Donald Trump will be as welcome as the proverbial skunk at the garden party. The other leaders need to take him on but not give him an excuse to walk out. As chair, Mr. Trudeau’s task is to keep the tone civil and constructive.

In recent weeks Chancellor Angela Merkel and President Emmanuel Macron have had a go at Mr. Trump on the trade differences as well as Mr. Trump’s decision to pull the US out of the Iran nuclear deal. Perhaps G7 leaders, collectively, can convince him that it is better to reform, not rubbish, the rules-based international system.

A useful outcome would be agreement on how to improve dispute settlement at the World Trade Organization. Leaders should also try to get ahead of the curve and come up with a collective approach to addressing Mr. Trump’s concerns about the auto industry. More tit-for-tat tariffs are not the answer.

The G7 summit is the pinnacle of a year-long process. The deliverables outlined in the final communique will be a measure of Canadian industry in the long process that culminates with the Leaders’ summit.

open quote 761b1bDonald Trump will be as welcome as the proverbial skunk at the garden party. The other leaders need to take him on but not give him an excuse to walk out. As chair, Mr. Trudeau’s task is to keep the tone civil and constructive.

Last week in Whistler, G7 development ministers agreed to make gender equality central to development policy and approved a slew of initiatives. It is a testament to consistent Canadian leadership dating back decades, especially on empowering women, including Stephen Harper’s focus at the UN on maternal and child health. The French promise to pick up the gender baton as they host the 2019 G7 summit.

Leaders are also expected to endorse a practical plan to rid the oceans of plastics. The Ellen MacArthur Foundation estimates that 311 million tonnes of plastic were produced in 2014. Without the kind of action proposed by the G7, there will be more plastic than fish in the oceans by 2050.

We can also expect blunt talk from Mr. Trump about allies paying “their fair share” of defence costs.

Canada remains at the low end of G7 nations, as a percentage of GDP spent on defence, but Mr. Trudeau can point to a series of initiatives, taken on his watch, that put Canadians at the sharp end in support of collective security. Canada leads the NATO brigade in Latvia. Our Special Forces are in the Middle East.  Royal Canadian Navy warships are in three oceans and our submarines are now into far waters. An RCAF plane is part of UN surveillance on North Korea. And Canadian Forces will soon be part of the UN peace operations in Mali.

It’s the 60th anniversary of our continental defence alliance. Mr. Trudeau needs to visit NORAD headquarters in Colorado. He should invite Mr. Trump to join him. It would visibly underline to Americans that Canada is a steadfast ally and make a mockery of Mr. Trump’s national security argument – the pernicious excuse for the steel and aluminium tariffs.

A year ago this week, Chrystia Freeland, Harjit Sajjan and Marie-Claude Bibeau spelled out the Trudeau government’s foreign policy. It is built on the themes of multilateralism and collective security with a focus on a feminist development policy and a progressive trade policy.

Each of these themes has guided Canada’s G7 stewardship. How they are reflected in the final communique will be a measure of the new Canadian internationalism and Mr. Trudeau’s standing with his peers.


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Donald Trump and G7

G7: Donald Trump versus the rest of the world

Leaders of seven of the world’s biggest economies are in Canada for what could be most acrimonious G7 summit in years.

A trade war looms as America’s allies threaten retaliation against US President Donald Trump’s trade tariffs.

The leaders of seven of the world’s biggest economies are in Canada for what could be the most acrimonious G7 summit in years.

Trump’s tariffs on steel and aluminium imports have caused outrage and a war of words with other world leaders.

The US president also finds himself virtually isolated on the Iran nuclear deal and climate change.

A showdown seems imminent.

So are we closer to a trade war that could derail the global economy?And will America First leave America Behind?

Presenter: Elizabeth Puranam Al Jeezera Inside Story

Guests:

Colin Robertson – former Canadian diplomat and vice president of the Canadian Global Affairs Institute

Inderjeet Parmar – department of international politics at City, University of London

Seijiro Takeshita – dean at the school of management and information at the University of Shizuoka

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G7 Tying Gulliver Down

POLITICS

06/06/2018 12:12 EDT | Updated 20 hours ago

G7 Without Trump? Experts Say His Presence Needed Despite Tariff Fight

The U.S. president’s world view doesn’t jive with his fellow global leaders.

EVAN VUCCI/AP VIA CP
Leaders of the G7, from left, European Council President Donald Tusk, Prime Minister Justin Trudeau, German Chancellor Angela Merkel, and President Donald Trump pose for a family photo at the Ancient Greek Theater of Taormina on May 26, 2017, in Taormina, Italy.

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G7 BBC view

Tariffs and Trump: Why the G7 summit in Canada could be awkward

By Jessica MurphyBBC News, Toronto

 

Image copyrightAFPImage captionHappier times… before the rift over Trump’s tariffs

Leaders of the world’s wealthiest nations are about to descend on a luxury hotel located in a small Canadian tourist town in Quebec. But it’s unclear if there’s more to divide or unite them.

Canada, which holds the G7 presidency this year, will host the leaders of the US, Italy, France, Germany, the UK and Japan in the town of La Malbaie,

Here are four things to know before the two-day summit begins on Friday.

  1. Canada, meet Donald Trump. Donald Trump, meet Canada

Since Ronald Reagan was elected in 1980, new American presidents have had an unofficial tradition – making Canada the destination for their first foreign trip.

George W Bush broke with tradition when he took a day trip to Mexico, but it wasn’t long before he travelled north for the 2001 Summit of the Americas in Quebec City.

Donald Trump waited longer – some 500 days into his presidency.

This Charlevoix Summit will be the first time he pays a visit to his northern neighbour as American leader.

The US president is unlikely to get the rock star welcome received by his predecessor, Barack Obama, who was greeted in 2009 by people gathered on Parliament Hill in Ottawa to catch a glimpse of the politician.

Mr Trump isn’t as popular as Mr Obama was among Canadians, and he is currently sparring with his Canadian counterpart Justin Trudeau over US tariffs on steel and aluminium imports.

2. Expect awkward conversations

On Saturday, G7 finance officials issued a rebuke over the “negative impact” of the US metals tariffs and urged “decisive action” on the matter when world leaders meet in La Malbaie.

Image captionLa Malbaie

It won’t be the first time Mr Trump’s stances on trade and other policy matters have caused friction among his world leader colleagues.

In fact, it could be more G6 + 1 than G7.

During the Italy summit in 2017, the US leader was left isolated over Paris climate change deal.

He was the lone man out when the other leaders reaffirmed their commitment to the Paris accord, the world’s first comprehensive deal aimed at reducing greenhouse emissions.

“We have a situation of six against one,” German Chancellor Angela Merkel said at the time.

Mr Trump later announced his intention to withdraw the US from the Paris deal.

Image copyrightAFP/GETTY IMAGESImage captionQuebec City is preparing for journalists, delegates and protesters to descend in the town for the G7

This time around, Mr Trump will undoubtedly be held to task over the recent metals tariffs slapped on Canada, Mexico and the European Union (EU).

European Commission President Jean-Claude Juncker and European Council President Donald Tusk will also both be attending the summit.

Canada is also in the midst of intense North American Free Trade Agreement negotiations with the US and Mexico.

A Canadian official who briefed journalists prior to the summit said it’s fair to say that any economic talks “will quickly go to a discussion on trade”.

“There will be a discussion and the president will be participating,” he said.

3. The ‘lonely hearts club’

John Kirton, director of G7 Research Group, says that inevitably, the leaders will find more that unites them than divide them.

He says the gathering is a uniquely intimate summit where some of the world’s most powerful political leaders can gather “face-to-face around a fireside, a dining room table”.

Image captionLa Malbaie

“The summit is the perfect place for leaders to freewheel, to say what they want, to be politically incorrect, to complain about their own domestic media.

“It’s a lonely hearts club, a kind of group therapy.”

He adds it won’t be the first time the consensus-based group finds itself divided since it came into being following the OPEC oil crisis in 1973.

The Canadian official said the meeting’s format allows for world leaders to have “a frank and full exchange”.

Image copyrightGETTY IMAGESImage captionNations are expected to announce commitments to reducing plastic waste in the world’s oceans

But as host, Canada is “working to bridge the differences that exists”.

There are fives themes for this year’s summit, which are:

  • Inclusive economic growth
  • Gender equality and women’s empowerment
  • World peace and security
  • Jobs of the future
  • Climate change and oceans

Colin Robertson, with the Canadian Global Affairs Institute summed it up in recent report on the coming Summit as “gender, work, climate, energy, our oceans, protectionism, populism and extremism”.

Foreign policy issues expected to be discussed include the planned meeting between President Trump and North Korean leader Kim Jong-un, tensions with Russia, China’s global influence, and the crisis in Venezuela.

Mr Kirton says he expects three main “deliverables” to come out of the Charlevoix Summit.

They include taking action to prevent foreign interference in democratic elections, an issue that falls directly into the central responsibility of the G7 for defending and spreading democratic governance.

Image copyrightREUTERSImage captionBritish PM Theresa May is expected to discuss US tariffs with President Donald Trump

It also comes at a time when the member nations have seen the public lose trust in government institutions.

coalition of 30 non-governmental groups are also hoping the countries, whose economies represent 45% of global GDP, will raise $1.3bn (£970m) for educating girls in developing countries.

“Summits are often a great global fundraiser,” says Mr Kirton.

Finally, the countries are expected to make commitments on removing plastics from the oceans – an environmental issue that has grown in prominence in recent months – and on making coastal communities more resilient.

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G7 Trade and Trump

Trump’s global trade war

‘Today is a bad day for world trade,’ says Cecilia Malmström, the European trade commissioner.

By

Updated 

 

The Trump administration ratcheted up the brinkmanship by announcing new duties on steel and aluminum imports from the European Union, Canada and Mexico | Chip Somodevilla/Getty Images

 

Donald Trump’s move to slap penalties on imports from U.S. allies including the EU is moving the country to the brink of a global trade war — with U.S. consumers, farmers and manufacturers caught in the middle — as the White House tries to wrest concessions from reluctant trading partners.

The Trump administration will impose new duties on steel and aluminum imports from the European Union, Canada and Mexico after failing to reach deals with them to address national security concerns related to the imports, Commerce Secretary Wilbur Ross said Thursday.

The decision has implications for farmers in key Midwestern states who will see their exports crimped, consumers who are expected to pay more, workers who may see cost-cutting in export-heavy industries and global relations with crucial trading partners as the U.S. tries to exert pressure on China.

“Today is a bad day for world trade,” said EU Trade Commissioner Cecilia Malmström, who tried to persuade the Trump administration to permanently exempt the EU from the new tariffs and begin trade negotiations instead.

“Throughout these talks, the U.S. has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU. This is not the way we do business, and certainly not between longstanding partners, friends and allies,” she said.

European Commission President Jean-Claude Juncker said the EU now had “no choice” but to challenge the U.S. action at the WTO.

It also indicates that the U.S. administration has given up hope of finishing NAFTA negotiations with Canada and Mexico in the near future. That raises the question of whether Trump will have the patience to wait until later this year or possibly even 2019 to get a new agreement, or if he will make good on a campaign promise to pull out of the 24-year-old pact. In addition, Mexico’s presidential elections are just a month away, and a new government may feel populist pressure to avoid giving any concessions to the Trump administration.

Mexico condemned the move and provided a partial list of $3 billion worth of U.S. imports that it will hit with retaliatory duties. The items include manufactured goods like lamps as well as agricultural imports from its neighbor like pork, apples and various cheeses.

European Commission President Jean-Claude Juncker said the EU now had “no choice” but to challenge the U.S. action at the WTO and to proceed with initial plans to retaliate on $3.3 billion worth of U.S. exports including items like yachts, whiskey bourbon, lipstick and orange juice. Those duties are expected to go into effect in mid-June.

Agricultural products make up about one-third of the total EU retaliation list in terms of value, with goods like kidney beans, rice, cranberries and peanut butter facing tariffs. The list also hits about $1 billion worth of U.S. iron and steel goods.

“This action puts American workers and families at risk, whose jobs depend on fairly traded products from these important trading partners. And it hurts our efforts to create good-paying U.S. jobs by selling more ‘Made in America’ products to customers in these countries,” said House Ways and Means Chairman Kevin Brady (R-Texas).

The action also casts a pall over the coming G7 meeting in Canada, where Trump will meet with other leaders of the world’s seven leading Western economies, including Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron and German Chancellor Angela Merkel.

“Mr. Trump will be like the proverbial skunk at the garden party given the protectionism,” said Colin Robertson, a former Canadian trade negotiator and vice president of the Canadian Global Affairs Institute. “He is the outlier anyway, but this is simply going to make those two days of discussions more tense.

A threat to domestic production

The latest move is another outgrowth of a Trump administration investigation released earlier this year that found that the overall volume of imports posed a threat to U.S. national security by undermining domestic production of the two metals.

The U.S. imported $29 billion worth of steel in 2017 — about half of which came from the EU, Canada and Mexico. Canada supplied more than 40 percent of the $17.8 billion worth of aluminum the U.S. bought in from foreign suppliers last year.

China is largely blamed as the primary source of global excess capacity in both the steel and aluminum sectors. But the U.S. imported just $1 billion worth of steel and $1.7 billion worth aluminum from China last year because of extensive duties that have been in place for years.

The EU, Mexico and Canada argued that they are such close allies of the U.S. they are unlikely to cut off steel and aluminum shipments in times of war. But the Trump administration rejected that reasoning.

“There is potential flexibility going forward. The fact that we took a tariff action does not mean there can not be a negotiation” — Wilbur Ross, U.S commerce secretary 

Despite the brinkmanship, Ross said the Trump administration wants to continue negotiations. He said he’s still planning to make a trip to Beijing this weekend even after the U.S. announced it would slap tariffs on $50 billion in Chinese goods, jeopardizing a fragile agreement to reduce the U.S. trade deficit with China. And Ross also said there’s still scope for negotiations with Canada, Mexico and the EU that could reduce or eliminate the tariffs.

“There is potential flexibility going forward,” Ross said. “The fact that we took a tariff action does not mean there can not be a negotiation.”

Surprise for neighbors

The decision to impose tariffs came as a shock to Canada and Mexico, as both countries thought that they would be spared from the levies because of earnest negotiations that they have had with administration officials over NAFTA. One U.S. industry official who had been in contact with negotiators from both sides said neither country had been notified by the White House as of Wednesday evening and they were learning of the possibility of tariffs from news reports.

But after nine months of NAFTA negotiations, there is no clear end to the talks and therefore Canada and Mexico were added to “the list of those that will bear tariffs,” Ross said.

Canadian Foreign Minister Chrystia Freeland had traveled to Washington on Tuesday to discuss the issue, among other matters, with U.S. Trade Representative Robert Lighthizer. But she left having made little progress in discussions and having little idea of what the Trump administration’s plans were, two sources briefed on the meeting said.

“Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States,” Freeland told reporters Wednesday. “I would like to absolutely assure Canadian participants, those who work in steel and aluminum industries, that the government is absolutely prepared to and will defend Canadian industries and Canadian jobs.”

Other Republican members of Congress were quick to criticize the move.

“This is dumb. Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” Sen. Ben Sasse (R-Neb.) said in response to the action. “We’ve been down this road before — blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’”

The Aluminum Association, which represents much of the aluminum companies in the U.S., also said that it was “disappointed” by the announcement. “Today’s action does little to address the China challenge while potentially alienating allies and disrupting supply chains that more than 97 percent of U.S. aluminum industry jobs rely upon,” said Heidi Brock, the group’s president and CEO.

But defenders of the administration’s action said it was badly needed to restore order to international steel and aluminum sectors.

“This situation needs to be dealt with. The rest of the world has enabled China to continue to produce massive amounts of steel with excess capacity into the hundreds of millions that has totally disrupted the global steel industry,” said Dan DiMicco, a former trade adviser to Trump.

DiMicco, who was a long-serving CEO of U.S. steelmaker Nucor, said China has always found ways to circumvent previous restrictions by sending products via Canada and Mexico, as well as Vietnam and South Korea, where they are slightly modified or relabeled before being sent to the U.S.

“If the whole world had dealt with this problem originally as we talked about for the better part of a decade now, we wouldn’t be where we’re at,” he said. “But we are where we’re at because nothing’s been done and it’s time to get it done.”

In that regard, the Trump administration hopes other countries will follow the lead of the EU, which has announced plans to impose safeguard restrictions on imports, so it isn’t hit with product diverted from the U.S.

“We look forward to other countries doing very similar things to shut down this very global problem,” Ross said.

Megan Cassella, Adam Behsudi and Hans von der Burchard contributed reporting.

 

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NAFTA

NAFTA Renegotiation Expected to Drag Out
Colin Robertson – Canadian Global Affairs Institute
Farmscape for May 30, 2018

With the passage of an informal deadline for completing the renegotiation of the NAFTA the Vice President of the Canadian Global Affairs Institute expects the pressure for a quick conclusion of the negotiations to ease.
With a mid May deadline for concluding the renegotiation of the North American Free Trade Agreement to avoid conflicts with Mexican presidential elections and U.S. mid term elections having passed, expectations are that a final deal will be significantly delayed.
Colin Robertson, the Vice-President and a fellow of the Canadian Global Affairs Institute, expects the profile of the negotiations to shift.

Clip-Colin Robertson-Canadian Global Affairs Institute:
My sense is that the negotiations will continue but probably more at the working level.
I think it’s less likely that the ministers will be getting together with the same regularity that they have particularly in the last six weeks because we have a number of events that will intrude.
First of all the Mexican election is now in full swing.
That election takes place on July 1.
There are some 30 thousand offices from the President, a number of Governors and their Congress, both Senate and their Legislative Assembly as well as provincial legislatures and municipal and county elections.
And we have the U.S. mid-term elections in November.
What normally happens during election campaigns is that trade negotiations either take a pause or move to a technical level where there’s not a requirement for political decisions, especially when it is possible that it seems likely that there may be a change in the configuration of the government.

Robertson says, while there is a desire to keep the momentum going, the pressure for a quick deal has been lifted and the desire within Congress to take the time needed to reach a full comprehensive agreement is growing.
For Farmscape.Ca, I’m Bruce Cochrane.

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NAFTA After Washington ministerials

The Vice-President of the Canadian Global Affairs Institute says participants in a discussion aimed at modernising the North American Free Trade Agreement have become highly invested in successfully concluding the negotiations

Negotiations aimed at rewriting NAFTA continued last week and are expected to resume again in about a week.

Colin Robertson, the Vice President and a fellow of the Canadian Global Affairs Institute, says we’ve seen, for the first time in 25 years, a gathering together of support in the United States saying let’s keep NAFTA. Polling will tell you that most Americans favour free trade with Canada and Mexico and see it working in their interests.

Colin Robertson discusses the recent round of negotiations:

“We’ve just concluded a marathon session of ministerial meetings in Washington, and the main subject of discussion was rules of origin surrounding the most traded commodities in question.

“We’ve closed the chapters on some significant subjects such as sanitation, phyto-sanitation and environment, and we’re close to closing the chapters on content rules on barriers to trade on important commodities.

“Donald Trump ran saying that NAFTA was the worst deal ever and threatened to tear it up on day one, but now, on day 100, I think there’s an appreciation within the administration that NAFTA would serve their interests and I think the administration has invested a significant amount effort into these negotiations.

“We’ve had eight formal rounds and effectively a ninth round and I think there’s a sense on the administration’s part that, if they can get a deal, it would serve their political interests, their political constituencies, particularly farmers and auto workers so I think they would like to now have a deal but it has to be under their terms.

“From a Canadian perspective, there’s broad agreement across Canada that NAFTA has worked for Canada and that we would like to continue it.

“This is shared across party lines and all premiers have been involved in pushing their counterpart governors and members of the legislature at the state level to underline how important the agreement is to their interests.

“Farm groups have also been involved in this; business groups; labour unions have also been making the case from the Canadian side to their American counterparts.

“There’s been a similar exercise conducted by the Mexican government and that is having some effect.

“We’ve seen for the first time in 25 years a gathering of support in the US, saying let’s keep NAFTA – they do think that having a trading relationship with Canada and Mexico does make some sense.”

 

As reported by Bruce Cochrane, Farmscape.Ca

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Putin, Sanctions, Canada and the G-7

Sending Russian intelligence operatives packing, back to Moscow, was necessary and important. Russian President Vladimir Putin’s regime crossed a red line with its use of a banned chemical agent in Britain. The West has to demonstrate collective sanction to deter this heinous form of assassination.

Russia is promising retaliation – tit-for-tat or some other form. The Putin modus operandi is to push until pushed back, so the West needs to plan its next moves.

As a first step, there should be agreement that no Western leader will attend Mr. Putin’s re-inauguration on May 7. Mr. Putin has made himself a pariah and should be treated as such.

As host of the G7 summit this June, Prime Minister Justin Trudeau should add managing the Putin regime to the agenda. The G7 needs to take the lead in a collective response and then encourage the rest of the West to follow.

But in considering further sanctions, the West needs to be smart. It must disapprove of the Putin regime but not the Russian people. What it should not do is withdraw its ambassadors in Moscow, nor send Russian ambassadors home. This old-fashioned tactic deprives leadership of our most experienced diplomats just when we need their advice and on-site perspective to avoid misunderstandings that can create dangerous escalation.

Nor should it sanction cultural, educational and scientific exchanges with the Russian people. These individuals are often critics of their own regime. We need to encourage them by showing them a better way, and exposure to life in our liberal democracies helps achieve this.

Similarly, cutting off access to our food and energy know-how leaves Mr. Putin and his kleptocratic entourage unscathed. But it does hurt the Russian people and gives Mr. Putin more ammunition to play on Russian insecurities. It also hurts Canadian farmers and the oil patch by denying them market opportunities when relations are normalized.

Smarter sanctions in a digital age would include those that target the pocketbooks of the kleptocrats, depriving them of a refuge for their ill-gotten gains. Ban them from entry to the West. And to really hit home, ban their wives and children from shopping, studying or working in the West.

Last year, Parliament adopted legislation – it passed unanimously in both the House of Commons and Senate – allowing travel bans and asset freezes on human rights abusers. Named after the Russian activist Sergei Magnitsky, who was beaten to death in 2009 in a Russian prison, it has already been applied against 52 human-rights violators in Russia, Venezuela and South Sudan. It’s a powerful weapon that should be applied judiciously but liberally. We should encourage all our allies to pass Magnitsky-style legislation.

We also need to better prepare for future threats. With support from the European Union and NATO, there are new centres of excellence related to hybrid threats in Helsinki, strategic communications in Latvia and cyberdefence in Estonia. All three deserve Canadian support. Recent revelations about the misuse of personal data make a compelling argument for the Canadian government to take up the Finnish invitation to join the Helsinki Center.

Canada should also rejoin the International Institute for Applied Systems Analysis (IIASA). Created in the aftermath of the Cuban missile crisis, it was an initiative of the Soviets and Americans to employ scientific co-operation to build bridges across the Cold War divide and to solve global problems. This Vienna-based organization does excellent work. The IIASA wants Canada back. As part of its recent recommitment to basic science, the government should respond favourably.

Mr. Putin has been renewed as President until 2024. Robert Gates, who served as defence secretary to presidents George W. Bush and Barack Obama, has a good read on the Russian President: “I had looked into Putin’s eyes and I saw a stone cold killer.”

Mr. Putin is trying to create a pro-Russia bloc of states of the former Soviet Union. He wants them tied economically and militarily to Russia. The invasions into Georgia, Moldavia and Ukraine, and the Syrian intervention, are all aimed at upending the post-Cold War rules-based order. Mr. Putin disregards borders and interferes in the election process of liberal democracies. He uses force – traditional, chemical and cyber – to settle revanchist scores.

The Putin problem needs readdressing by the G7 at Charlevoix, Que. As host, Canada must be strategic in offering ideas. There is more than enough global disarray without tumbling into a new Cold War.

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Trump, Trade Deficits and Trudeau

President Donald Trump repeated his controversial claim on Thursday that the U.S. has a trade deficit with Canada to swipe at Canadian Prime Minister Justin Trudeau, a day after boasting about attempting to bluff the Canadian leader on the subject.

“We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive),” Trump said on Twitter on Thursday morning. “P.M. Justin Trudeau of Canada, a very good guy, doesn’t like saying that Canada has a Surplus vs. the U.S. (negotiating), but they do…they almost all do…and that’s how I know!”

The Office of the U.S. Trade Representative says the U.S. in 2016 had a goods and services trade surplus with Canada of $12.5 billion. And Trump’s own 2018 economic report, which was released last month and signed by the president, also notes that the U.S. runs “a net bilateral surplus only with Canada and the United Kingdom.”

But Trump and his top trade official, USTR Robert Lighthizer, argue that official statistics understate the size of the U.S. trade deficit with Canada, as well as with Mexico, because the data doesn’t reflect the value of imports from China and other suppliers that first enter the U.S. and are then re-exported to one of the North American neighbors.

“You have a number of — $30, $40, $50 billion worth — of transshipments that have nothing to do with the U.S. economy,” Lighthizer told reporters in January of this year, at the end of a round of talks to renegotiate the North American Free Trade Agreement. “We end up having wrong numbers about Canada, wrong numbers about Mexico.”

The president’s early morning tweet came after he bragged to donors at a closed-door fundraiser in Missouri on Wednesday evening that he recently told Trudeau the U.S. had a trade deficit with Canada, even though he wasn’t sure of the details. He said the Canadian prime minister refuted his claim.

“I didn’t even know,” Trump said, according to audio obtained by POLITICO. “I just said, ‘You’re wrong.’”

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Trump also reportedly asked staff to check on Trudeau’s assertion that the U.S. does indeed have a trade surplus with Canada. He then said that the statistics don’t include energy and timber, “and when you do, we lose $17 billion a year,” he said. ‘It’s incredible.”

The White House defended Trump’s comments at a press briefing Thursday afternoon and appeared to embrace his formula, telling reporters that the data showing a surplus are “not complete.”

“The president was accurate because there is a trade deficit and that was the point he was making,” said White House presssSecretary Sarah Huckabee Sanders, adding: “There are plenty of things, once you take into the full account all of the trade between the two countries, that show that there actually is a deficit between those two.”

The latest back-and-forth over the deficit comes as the U.S. is negotiating with Canada and Mexico to modernize NAFTA, which took effect in 1994. Trump in recent weeks has repeatedly mentioned a U.S. trade deficit with Canada in the context of the NAFTA talks. “We have large trade deficits with Mexico and Canada,” he has said, using that to defend his argument that the agreement has been a “bad deal” for Americans.

But Canada’s Foreign Affairs Ministry, which is leading the NAFTA talks for Ottawa, brushed off Trump’s latest remarks.

“Canada and the United States have a balanced and mutually beneficial trading relationship. According to their own statistics, the U.S. runs a trade surplus with Canada,” Adam Austen, a foreign affairs spokesperson, said Thursday. “We are energetically at work modernizing and updating NAFTA to support good jobs and the middle class in Canada, the United States, and Mexico.”

Trump’s latest remarks are unlikely to have any significant effect on the ongoing talks, which are set to resume next month with another formal negotiating round, to be held outside Washington, D.C.

“I think people just look at this and say, ‘There he goes again,’” said Colin Robertson, a former Canadian diplomat who was part of the country’s original NAFTA negotiating team. “I think people think Trudeau has managed Trump well to the national interest. They know that you can’t insult him, because our prosperity depends on our ability to trade with the U.S.”

“So don’t get diverted,” Robertson added. “Don’t get fussed by this.”

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